Devils in the details in cost analyses to change Lackawanna County government

For Lackawanna County voters who want to know if the proposed switch to an executive-council form of government will cost them more, the definitive answer is elusive.

Proponents and opponents each have their own analysis, and each questions the assumptions of the other’s analysis.

Who is right depends on whose assumptions you believe, because no independent source has ever studied the costs of one form versus the other. That leaves plenty of room for a political debate in the days leading up to voters’ decision on the future of county government at the May 20 primary election.

For two weeks, government study commission Chairman Chuck Volpe’s political action committee has aired television commercials promoting the limit on taxing power that he says an executive-council form will bring.

Last week, the county commissioners fired back, issuing a memo written by Chief Financial Officer Thomas Durkin, which warned of a tax increase in 2016 if voters approve the executive-council form.

“Inasmuch as the current county budget is balanced, I see no option for funding the new form of government other than a tax increase to raise an additional $1.1 million of revenue in 2016,” Mr. Durkin wrote.

That’s almost 1 mill of taxation. The county charges 57.42 mills in property taxes. With a mill equal to $1 in tax for every $1,000 of assessed property value, the owner of a residential property assessed at the county average of $13,000 pays $746 and would pay $13 more.

“That’s what the professional staff in the county tell us,” county Commissioner Corey O’Brien said.

Utter nonsense, said government study commission member Mary Jo Sheridan, also the county deputy controller, whose own analysis shows the new form of government will save tens of thousands of dollars. The major flaw in Mr. Durkin’s analysis is his comparison of Lackawanna County to Allegheny County, whose population is far larger, she said. Allegheny has 1.23 million residents; Lackawanna has 213,931, according to 2013 Census Bureau population estimates.

“I laughed out loud when I saw it,” Mrs. Sheridan said.

By one measure, the new form of government will undoubtedly cost more.

Counting only the salary of the current and new elected officials, the new government will be $30,304 more expensive because, besides a county council, the new form will require adding a prothonotary.

Determination murky

Of course, no government pays only salaries. When health insurance and other benefits are factored in, the determination of which form is cheaper becomes murkier.

The analyses provided by Mrs. Sheridan and Mr. Durkin vary wildly.

Mr. Durkin’s analysis shows the executive-council form will cost $2.1 million, only about $471,000 less than Allegheny County, compared to about $1 million for the three-commissioner form, making the executive-council form about $1.1 million more expensive.

Mrs. Sheridan’s analysis shows the executive-council at $1.516 million, the three-commissioner at $1.576 million, making the commissioner form about $60,000 more expensive.

Mrs. Sheridan’s cost for the commissioner form is substantially higher than Mr. Durkin’s, because she counts all the costs of operating the clerk of judicial records office. She includes those costs plus all the costs of adding a prothonotary in her executive-council estimate. Mr. Durkin accounts for the prothonotary, too.

Two factors explain why Mrs. Sheridan estimates the executive-council form will cost less and Mr. Durkin finds quite the opposite.

The main one is Mr. Durkin rooted his analysis in Allegheny County’s 2014 budget. He said he did that because Mr. Volpe most often cites the benefits of the Allegheny executive-council government. Also, Mr. Durkin added only health insurance benefits to the salaries in both forms and not the costs of pension contributions or other benefits.

That Allegheny assumption shows in the way they did their estimates for a county manager’s office.

The office exists in the executive-council form to serve as a liaison between the executive and department heads. In the commissioners’ form, the chief of staff does that.

In Allegheny County, the county manager’s office actually costs $1.1 million, according to Mr. Durkin’s analysis. Mr. Durkin assumes Lackawanna County’s manager’s office will have just as many employees, 14, as Allegheny and calculates their cost will be almost as much, $1.04 million.

Mrs. Sheridan scoffs at that. In her analysis, she assumes the county manager replaces the chief of staff with each having an administrative assistant at the same cost and that’s it.

Mr. Durkin defended his assumption of a county manager’s office equal to Allegheny County. Mr. Durkin said the county manager will need a “robust” staff, especially if the county executive is a politician who lacks government expertise.

Mrs. Sheridan said that’s untrue. But if necessary, the money spent on seven people who report to the chief of staff can be spent on a staff for the county manager, she said. She doesn’t count them in either of her estimates because she assumes they will be around in both.

As for the benefits, instead of counting only health insurance benefits, Mrs. Sheridan factors in all benefits, but not based on what the county actually pays for them.

She uses a nationwide average of salary and benefits paid to state and local government employees from the federal Bureau of Labor Statistics. Nationally, salary amounts to 64.5 percent of total compensation with benefits — health insurance, pensions, life insurance, vacations — adding up to the rest.

Mrs. Sheridan said she did this because health insurance and other benefits vary widely from person to person and it’s impossible to know what all the benefits in a new form of government will be. Her way compares “apples to apples,” she said.

Benefits differ

Unlike under Mr. Durkin’s estimate, which assumes health benefits at $15,000 for each employee, Mrs. Sheridan varies total benefits based on job.

So, for example, the estimated benefits for a commissioner cost $41,809, a county executive, $49,500, and an administrative assistant, $20,324.

Mr. Durkin questioned that approach, saying health benefits constitute the largest costs and are real numbers. He acknowledged the county contributes to pension plans, but said it makes one overall payment to each plan and the cost isn’t broken down. Because the payment covers current and retired employees, he does not calculate the per-employee cost, and instead deals with payments as a whole, he said.

Even if Mr. Durkin is wrong, Mrs. Sheridan’s projected savings are hardly the millions of dollars in savings Mr. Volpe once predicted.

Last year, he touted the millions of dollars taxpayers would save by changing forms.

In late March, Mr. Volpe backed off and contended the switch would probably amount to a wash.

“Money was never part of our argument,” he said then.

Instead, Mr. Volpe is emphasizing how the executive-council form has greater checks and balances to curtail overspending and restrict tax increases while also costing somewhat less.

Mr. Volpe said he made that “save millions” argument only briefly and only early on in his effort to gather enough signatures to call for a study of county government.

“I will say at this point, it was ignorantly stated by me,” Mr. Volpe said. “At that point ... that was made in kind of a fit of bravado based on true belief without any real support, just maybe gut instinct. ... It was never brought up again. That was what I meant when I said it didn’t become part of the argument.”

Whatever the real cost, Doug Hill, executive director of the County Commissioners Association of Pennsylvania, pointed out that the cost of the top administration in either form is a small part of a county’s budget. For instance, the $1 million cost of the Lackawanna County three-commissioner form is about 1 percent of the county’s 2014 budget.

“Human services, the courts and prisons are the real drivers of costs,” Mr. Hill said.

He said no one has formally studied whether one form of government is cheaper than the other.

Contact the writer:

bkrawczeniuk

@timesshamrock.com

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